Exam 1: An Introduction to the Foundations of Financial Management

A corporate manager decides to build a new store on a lot owned by the corporation that could be sold to a local developer for $250,000.The lot was purchased for $50,000 twenty years ago.When determining the value of the new store project

To measure value,the concept of time value of money is used

S-type corporations and limited liability companies are taxed like partnerships,but have the advantage of limited liability for their owners.

Which of the following is NOT true regarding mortgaged-backed securities(MSB)?

Working capital management is concerned with

Maximization of shareholder wealth

The CEO of JLI Corp.decided to expand into a new market in 2010.At the end of 2010,JLI's stock price had decreased 5% since the beginning of the year.Which of the following statements is MOST correct?

Which of the following statements best represents the "Agency Problem"?

S-type corporations have all of the following advantages EXCEPT

There is no legal distinction made between the assets of the business and the personal assets of any of the owners in the limited partnership.

In order to reduce agency problems,managers may be provided compensation that includes

The primary goal of a publicly owned corporation is to ________.

A corporate treasurer is typically responsible for cash management,credit management,and raising capital.

The manager of Golden Ray Corporation receives a bonus if company profits exceed $1,000,000 this year.During the final week of the year,the manager changes an accounting policy that will increase reported profits from $950,000 to $1,025,000,triggering his bonus.The change in profits of $75,000 will reverse itself in the next year,and the accounting change has no impact on Golden Ray's cash flow.Discuss the above situation as it relates to both an agency problem and efficient markets.

The three basic types of issues addressed by the study of finance are

John won the lottery on Monday and can take either $50,000 per year for 20 years,or $500,000 today.Bill won the same lottery on Tuesday and has the same options for receiving the cash.A well respected financial advisor is hired by both John and Bill.The advisor recommends that John take the $50,000 per year for 20 years but advises Bill to take the $500,000 up front payment.How is it possible to give different advice to two clients regarding the exact same cash flows?

As of year-end 2012,the great economic recession in the United States that began in 2007 has NOT officially ended.